Dutch job-related investment tax credit: Have you factored in the new tax incentive for your investment plans?

As of 1 January 2021, the Netherlands introduced a new tax incentive scheme, the so-called job-related investment tax credit (baangerelateerde investeringskorting) (the BIK). The BIK allows Dutch companies that make certain qualifying investments, for example acquiring new equipment, to utilize a tax credit against their payroll taxes (wage tax and social security contributions). In this publication, we explain how the BIK works, what investments qualify and how to apply.

Against the background of economic uncertain times due to the COVID-19 pandemic one of the main priorities of the Netherlands Tax Plan 2021 is stimulating business investments. The Tax Plan 2021 introduced the BIK as a crisis measure with the aim of stimulating Dutch investments and thus contributing to the economic recovery in the Netherlands.

The direct goal of the BIK is to stimulate business investments as much as possible by encouraging companies (multinationals as well as small and midsize companies) to make new investments. The BIK tries to achieve this goal by reducing effectively the costs for companies that invest.

The Dutch government has made a budget available for the BIK of EUR4 billion (approximately USD4,853,140,000) in total for the years 2021 and 2022. At the end of 2021, it will be estimated to what extent the budget of EUR2 billion for 2021 will be used. Depending on the available remaining budget, the amount of tax credit i.e. percentages (see below Tax benefit) can be increased or decreased for the year 2022.